_______________________________________________________________________________
Title: Government Management Issues
Subtitle:
Report No.: GAO/OCG-93-3TR Date: December 1992
_______________________________________________________________________________
Author: United States General Accounting Office
Office of the Comptroller General
Addressee: Transition Series
This file contains the text of a GAO report. Delineations within the text
indicating chapter titles, headings, and bullets are preserved. No attempt has
been made to display graphic images or pagination of the typeset report.
Footnotes appear in brackets at the reference point in the text. Underlined
text is indicated by underscore characters (_Introduction_). Superscript
characters are preceeded by a backslash (\a). Figures may be omitted or
replaced with tables. Tables may not resemble those in the printed version.
A printed copy of this report may be obtained from the GAO Documents
Distribution Facility by calling (202) 512-6000 or faxing your request
to (301) 258-4066 or writing to P.O. Box 6015, Gaithersburg, MD 20877.
_______________________________________________________________________________
CONTENTS
The State Of Management In The Federal Government
- Changing The Way The Government Manages
Learning From The Experience Of Other Governments
Creating A Framework For Addressing Management Problems
- Clarifying Accountability And Managing For Results
- Focusing On The Long Term
- Realigning The Machinery Of Government
Related GAO Products
- Management Reform
- Reviews Of Central Management Agencies
- Assessments Of Increased Management Flexibility
Transition Series
- Economics
- Management
- Program Areas
Office of the Comptroller General
Washington, DC 20548
December 1992
The Speaker of the House of Representatives
The Majority Leader of the Senate
In response to your request, this transition series report on government
management addresses important policy and management issues facing the
Congress and the new administration. This report assesses the incentives and
constraints that managers face in their efforts to achieve program results. In
that context, it sets the stage for our related transition series reports
dealing with financial and information management, program evaluation, and
public service issues.
Efforts are under way in state governments, other countries, and some federal
agencies to address similar problems. Taken together, these efforts have laid
the groundwork for broader action on the part of the federal government. What
is needed now is specific action. This report outlines the key elements of a
management improvement framework that should be considered at the federal
level.
The GAO products upon which this report is based are listed at the end of the
report.
We are also sending copies of this report to the President-elect, the
Republican leadership of the Congress, the appropriate congressional
committees, the Director-designate of the Office of Management and Budget, and
other appropriate officials.
THE STATE OF MANAGEMENT IN THE FEDERAL GOVERNMENT
-------------------------------------------------------------------------------
The state of management in the federal government is not good. Too many
principles, structures, and processes that may have worked well years ago no
longer allow the government to respond quickly and effectively to a rapidly
changing world.
For too long, progress in changing the situation has been slow. Incremental
improvements have occurred. But time and again over the past decade, our
management reviews of large federal agencies and departments have shown that
the processes and systems fundamental to a well-run organization are often not
present. Most agencies have not created a strategic vision of their futures,
most lack good systems to collect and use financial and program information to
gauge operational success and accountability, and many do not have the people
with the necessary skills to accomplish their missions.
These elements are essential for any organization to succeed. But they usually
do not command the attention of senior political officials coming into the
government. After all, these elements do not appear to be directly related to
the development of an administration's policies or programs and therefore do
not seem important to achieve a political agenda. However, many of our audit
reports demonstrate the effects of leaders' inattention to these
elements--waste, inefficiency, and even scandal. Political leaders then have
to spend too much time and energy reacting to surprises resulting from
management failures rather than pursuing the mission of their agencies and
their policy agenda. For example, our work has shown that lack of attention to
these critical elements has led to the following types of problems:
-- In 1989, a series of major, well-publicized problems involving widespread
waste, fraud, abuse, and mismanagement began unfolding at the Department of
Housing and Urban Development. Poorly designed programs and controls
made it relatively easy for developers and lenders to exploit the
Department's programs, costing the government billions of dollars.
-- The Department of Defense's (DOD) acquisition programs are vulnerable to
influence peddling. This was the focus of the "Ill Wind" investigation,
which involved more than 250 subpoenas for documents and evidence on the
activities of over 50 private consultants and more than a dozen
defense companies and industry executives, as well as DOD
officials. Convictions resulted, but the system and controls
still need to be improved.
-- Defaults in the Guaranteed Student Loan Program skyrocketed to $3.6 billion
in 1991. The program is plagued by inordinately complex and cumbersome
practices, lacks sufficient oversight, and places most of the financial
risk on the federal government. Even if the program's structure were
to be reformed, serious weaknesses in the Department of
Education's financial and management systems would make it
difficult to manage its multibillion-dollar programs and
could overwhelm the effects of any potential reform
measures.
-- Widespread weaknesses in financial controls at DOD have permitted the
expenditure of about $40 billion for unneeded purchases and have
significantly increased the risk of waste, loss, and theft. DOD
continues to make unneeded purchases because its information systems
are so poor that, in many cases, it does not know what items it
already has in stock.
-- The $110 billion Medicare program has lost billions of dollars to waste,
fraud, and abuse in recent years. The Department of Health and Human
Services does not properly manage its contractors' efforts to recover
improper expenditures. Also, loose controls over who can bill
Medicare have made the pursuit of fraudulent providers difficult.
In addition, too little money is earmarked by the Congress to
do the job right. For example, contractors paid an estimated
$2 billion in claims that should have been paid by other
health insurers, but recovering these funds would
require additional staff, which in turn would
require cutting spending elsewhere.
-- The Department of Veterans Affairs has not integrated its currently
separate information systems into one that is capable of sharing and
accessing data across all program areas. Nor has it reengineered its
administrative processes as it has modernized its computer systems.
For example, it recently spent $94 million to modernize its
benefit delivery process but shortened the process by only 6 to
12 days out of 151 days, on average. As a result, the
Department's planned purchase of additional computer
hardware and software may be premature.
-- The Resolution Trust Corporation (RTC), which is responsible for managing
and selling assets totaling over $400 billion for an estimated 725 failed
thrifts, has been unable to effectively execute sales strategies for a
large portion of the real property it holds because it cannot track
the status of many of its assets even though it spent $27 million
on a computerized tracking system. Some properties have been
sold for significantly less than their appraised value, and
others cannot be sold because RTC and prospective buyers
do not know whether the properties have clear titles.
-- Federal hiring mechanisms are burdensome and complex, making it difficult
to get qualified people. For example, the examination process introduced in
1990 for job applicants for over 90 entry-level positions imposed
procedures that effectively broke the link between an agency's
recruiting and hiring functions for all but the top academic
achievers. As a result, there is no guarantee that agencies can
hire many of the candidates they interview on college
campuses. Applicants may get job offers from agencies for
which they have no desire to work.
Because the government has not addressed many of its fundamental management
problems, we are issuing specific transition reports on financial management,
information management, program evaluation, and public service issues.
_Financial Management Issues_ (GAO/OCG-93-4TR, Dec. 1992) discusses widespread
financial management weaknesses that are preventing our leaders from running
the federal government effectively. At present, the federal government runs
the world's largest financial operation without having the reliable
information needed for making informed decisions. It spends about $1.5
trillion annually using unreliable systems and ineffective controls. And it
manages hundreds of programs, many of them individually larger than our
nation's biggest publicly owned corporations, without adequate knowledge of
their financial condition and of the results achieved. This devastating legacy
is the product of decades of neglect.
_Information Management and Technology Issues_ (GAO/OCG-93-5TR, Dec. 1992)
points out that the federal government spends over $20 billion annually on new
technology--and tens of billions more on running current systems. Yet agency
after agency still lacks critical information needed to analyze programmatic
issues, manage agency resources, control expenditures, and demonstrate
measurable results. Causes contributing to these problems include (1) the
inattention of top federal executives to the strategic role of information
technology in reengineering business practices; (2) the lack of authority and
resources given to information resource managers to help their agencies
modernize and simplify work practices, define information needs, and ensure
the most effective use of information resources; and (3) the demand for
certainty in the system development process--prescribed by the federal
acquisition management and budget process--which leads project managers to
downplay risks and problems.
_Program Evaluation Issues_ (GAO/OCG-93-6TR, Dec. 1992) discusses the
consequences of the continuing decline in the capacity for effective program
evaluation in the executive branch. It shows that agencies lack information on
the effectiveness of their programs; lack data on the targeting and outreach
of their programs; and need to improve their capacity to make sound decisions
on the use of data for policy-making.
_The Public Service_ (GAO/OCG-93-7TR, Dec. 1992) discusses what the government
must do to attract and retain high-quality people, meet the public's
performance expectations, and regain a positive public image. It must (1)
modernize its practices for recruiting, hiring, and structuring benefits; (2)
examine complex and restrictive laws, regulations, and processes that have
hampered its ability to manage its workforce; (3) fully implement pay reform
to make federal salaries ultimately competitive with the private sector's; and
(4) rebuild a positive public image by aggressively implementing strong ethics
programs.
This report assesses the incentives and constraints that managers face in
their efforts to achieve results. Too often, managers face conflicting
priorities and constraints that discourage good management. Consequently, they
spend too much time responding to these constraints and not enough time
delivering quality program results.
===============================================================================
CHANGING THE WAY THE GOVERNMENT MANAGES
Over the past decade, many private sector organizations recognized that they
would have to change their cultures and processes to survive in a rapidly
changing world. As a result, they have decentralized authority, flattened
organizational structures, increased employees' involvement in and control
over the workplace, and focused more on the needs of their customers. These
trends are improving quality and quickening response to customers' needs.
The federal government is obviously not going out of business, but its ability
and capacity to serve the public have clearly diminished. We must change the
way we manage the government if we are to improve its efficiency and
effectiveness and restore public confidence. But making the changes will not
be easy because the federal government poses the following unique challenges:
-- The federal government is overwhelmingly large. It employs over 3.1 million
civilians in 14 executive departments and more than 60 independent agencies
and government corporations. It spends about $1.5 trillion a year--more
than the entire Gross Domestic Product of Germany, which has the
third largest economy in the world.
-- The political environment and the operating cultures in many agencies
resist efforts to define clear missions for specific programs. For many
programs, missions are ambiguous--as the slogan "ameliorate poverty"
suggests--and for others, multiple objectives, often without
priorities, can challenge federal managers.
-- The federal government does not directly control many of the services that
it delivers. Although its agencies provide many services
directly--veteran's health care and social security checks, for
example--it relies more frequently on states, localities, nonprofit
agencies, and profit-making contractors to deliver its services.
The federal government grants over $180 billion a year to third
parties and contracts for another $190 billion in goods and
services.
-- The federal government, unlike a number of other countries' governments,
relies heavily on noncareer executives to manage its programs. About 500
full-time positions in the executive branch are appointed by the
President and require confirmation by the Senate, and another 2,600
positions may be appointed by the White House and the heads of
departments or agencies.
The unique challenges posed by our government should not, however, be an
excuse for inaction. Several countries have initiated strategies to change
their organizational cultures and introduced incentives to create a
results-oriented environment and improve the management of their governments.
So have some states. Through our analysis of these initiatives and our
management reviews of major federal departments and agencies over the past
decade, we have identified some fundamental obstacles that cut across agencies
and departments and must be overcome if we are to better manage our
government. These obstacles include
-- diffuse accountability for achieving results,
-- incentives that encourage short-term responses to long-term problems, and
-- antiquated government machinery.
The remainder of this report (1) presents the approaches that other
governments have used to address these same obstacles and (2) offers a
framework for action within which the federal government can also begin to
manage for results. We must overcome these obstacles if we are to improve the
government's efficiency and effectiveness and restore public confidence.
LEARNING FROM THE EXPERIENCE OF OTHER GOVERNMENTS
-------------------------------------------------------------------------------
The U.S. government is not alone in attempting to address major management
problems. Governments in countries such as Australia, Great Britain, Canada,
New Zealand, and Sweden began in the mid-1980s to rethink how their public
sectors operated and to create a more results-oriented environment.
Furthermore, governments in some states--such as Florida, Minnesota, Oregon,
and Texas--have recently begun to do the same. While these governments may not
all have succeeded in making sweeping changes, their experience is instructive
and applicable to the federal government.
Much like the federal government, a number of these national and state
governments were dissatisfied with their public service in the mid-1980s. Some
faced economic crises that led to major cuts in public spending, and their
leaders were committed to changing the way government worked. They started by
assessing their operating environments and came to a variety of conclusions
along similar lines:
-- Public servants were by and large committed and hard working; the problem
was the system in which they had to work.
-- Bureaucratic constraints rather than missions drove management behavior.
-- Management cultures tolerated few or no mistakes; elaborate
check-and-control systems that had been instituted to prevent mistakes
stifled innovation.
-- Managers lacked control over any savings they generated; hence, they had
few incentives to be efficient.
-- Large and inefficient bureaucracies adversely affected global
competitiveness.
In general, these governments tried to change incentives for individual
managers and organizational cultures across their entire public service. All
of them emphasized achieving results by introducing quasimarket mechanisms and
incentives similar to those used in the private sector, including competition,
a focus on the customer, a focus on quality, and clear standards and
accountability. The following points demonstrate the range of strategies
employed.
To clarify accountability, they
-- recast their budget focus from accounting for inputs to emphasizing
programs, outputs, and results. Quality results were shaped by program
customers' needs.
-- separated policy-making functions from program administration within
departments.
-- used written individual and organizational performance agreements between
the department and agency heads responsible for program administration to
better define and clarify program missions and intended results.
-- made organizational changes between departments to reduce conflicts in
program missions and to consolidate similar functions.
To create a longer-term focus in addressing management issues, they
-- broke out agencies' operating budgets separately and created a 3-year
rolling budget so that agencies would know what their next year's operating
budgets would be. Although funds continued to be appropriated annually,
their version of the Office of Management and Budget (OMB) was
committed to supporting the next year's funding levels.
-- gave top agency managers performance agreements of up to 5 years.
To provide incentives and tools to be more results oriented, they
-- changed the roles of their central agencies from controllers to
facilitators. To different degrees, program agencies were empowered to take
lead responsibility for control in specific areas. These governments'
versions of OMB, the Office of Personnel Management (OPM), and the
General Services Administration (GSA) transformed their own roles
to provide oversight and guidance. As service providers, they
became more customer oriented.
-- increased managers' control over operating budgets by allowing them to
-- simplify and streamline appropriation accounts and budget execution
procedures;
-- hire and fire staff and set their own pay levels and rewards for staff; and
-- buy their own equipment and negotiate rents outside of their responsible
central agency if they could save money by doing so.
-- introduced incentives to manage efficiently by
-- requiring efficiency savings but permitting agencies to retain a share of
the savings beyond the agreed-upon targets;
-- introducing the concept of risk management, which weighs the costs and
benefits of administrative controls; and
-- increasing the use of internal and external user charges.
The results of these initiatives have not been comprehensively assessed
because many of the initiatives are still in early phases. However, in our
view, initial results are encouraging. The public service in these countries'
governments, as well as in some state governments, has been energized to act,
and government operations have changed substantially. Officials from these
governments told us there was little likelihood of returning to past
practices. And reports from these governments seem to confirm that point of
view, as the following examples show:
-- A 1991 review of Great Britain's management improvements concluded, "There
are . . . extended opening hours to meet customer needs. New products and
services are being introduced. Facilities for clients are being improved
and services are generally being delivered faster and more
accurately. Waiting times have been reduced." And this was all
done while reducing agencies' operating budgets.
-- A 1990 review concluded that Australia's improvement efforts had not only
achieved financial savings but had also improved public sector management
by introducing a more flexible budget framework and creating a
management focus on results. Australia is currently assessing the
impact of its efforts on service to the public.
-- A 1992 study concluded that Minnesota had improved the provision of central
services for staffing, purchasing, and information resource management by
giving departmental managers the flexibility to design individual
strategies to improve service levels or decrease service costs. The
strategies incorporated concepts such as customer focus, employee
involvement, strategic planning, and managerial discretion.
Satisfaction surveys of the central divisions' customers
revealed significant improvements in the timeliness and
quality of the services received.
CREATING A FRAMEWORK FOR ADDRESSING MANAGEMENT PROBLEMS
-------------------------------------------------------------------------------
The creation of a results-oriented environment in the governments of some
other countries and of some states has been directed primarily from the top by
a committed cadre of managers. These managers have focused on changing the
culture, incentives, and systems that managers used in their day-to-day work.
Similarly, in the federal government, many policymakers and managers have been
working hard for long periods to improve the basic systems necessary to
overcome the management problems facing federal agencies. But we have not
changed our government's culture and incentives enough to create a
results-oriented environment.
Nonetheless, some progress has been made. In the past few years, federal
agencies have given increasing emphasis to changing their organizational
cultures to become more customer and quality oriented. Many components of
federal agencies have been using total quality management (TQM) techniques to
stimulate cultural change. TQM is an approach aimed at improving the quality
of services by focusing on the needs of customers and achieving continuous
improvement.
A significant number of federal organizations are voluntarily implementing
TQM. About 68 percent of the federal components that we surveyed in mid-1992
reported that they were in various phases of implementing TQM--most in the
early phases. Although TQM is being initiated on a fairly wide scale, the
depth of employee involvement is still shallow; about 13 percent were involved
at the time of our survey. We also found that, as their TQM efforts developed
and matured, organizations reported fewer barriers and more employee
involvement. More importantly, the level of reported benefits attributed to
TQM efforts--improved customer service, timeliness, and reduction in
costs--increased substantially for federal installations as their
implementation of TQM progressed.
However, the pace and scope of management improvement efforts need to be
accelerated and expanded if there is to be any real improvement in the
delivery of services to the public. How can this be accomplished? It will not
be easy or quick. But progress can be made within a three-part framework that
would place greater emphasis on achieving results by (1) clarifying
accountability, (2) emphasizing a long-term focus, and (3) realigning the
machinery of government.
===============================================================================
CLARIFYING ACCOUNTABILITY AND MANAGING FOR RESULTS
The first step is to clarify accountability and manage for results.
Agencies need to develop long-term strategies targeted to achieving
programmatic outcomes. Agencies also must develop measures of performance and
publicly report results.
OMB has been encouraging agencies to develop programmatic missions, goals, and
objectives and link them to performance through its implementation of the
Chief Financial Officers (CFO) Act. As part of this effort, it has called on
agencies to experiment with and develop program measures and related cost
information and report this information in their annual financial statements.
An extensive study of users' needs by the Federal Accounting Standards
Advisory Board has shown a desire for more information on both the
accomplishments and costs of government programs.
However, given the frequent turnover in top management in federal agencies and
the long-term nature of creating useful performance measures, it is
appropriate to create a legislative framework. For example, using the CFO Act
as a foundation, steps could be taken to improve accountability for program
results. In establishing the requisite framework, several principles should be
kept in mind:
-- Agencies need to articulate their missions in the context of statutory
objectives and, with regard to services, customers' expectations. These
objectives need to be written in terms that can be used to judge
progress toward achieving them. Every effort should be made to reach
agreement among the Congress, OMB, and the executive agencies on
realistic, outcome-oriented goals, recognizing that agreement
will not always be possible.
-- Agencies need to develop implementation plans for their goals and
objectives as well as specific measures of progress toward achieving them.
Measurable interim targets should be set for agencies' operations so
that assessments of progress can begin.
-- Agencies need to report annually on their progress. The Congress must be
actively involved in overseeing agencies' performance in key areas. If the
Congress does not take performance results seriously, neither will the
agencies.
The Congress recently considered legislation that encompasses this framework
for accountability. This legislation would require all agencies to develop
strategic plans, set agreed-upon goals and objectives, and measure their
progress toward these goals and objectives. [ Footnote 1: S. 20, "Government
Performance and Results Act of 1992," 102nd Congress, cosponsored by Senators
William V. Roth, John Glenn, and William S. Cohen. ] It would also allow
pilot agencies to test whether increased managerial flexibilities--such as
exemptions from restrictions on funding transfers among certain budget object
classifications--are appropriate incentives for encouraging managers to focus
on programmatic results. Action on this type of legislation should be high on
the agenda of the 103rd Congress.
_______________________________________________________________________________
Improving Financial and Program Information
Reliable financial and program data need to be available. A central first step
toward improving decision-making and accountability is to effectively
implement the CFO Act. This act provides an important blueprint for improving
financial accountability for results by requiring the development of needed
systems, the hiring of qualified people, and the linking of accounting and
budgeting information.
Concerted action is required by both the executive and legislative branches to
ensure that good financial management becomes a reality. This will entail
-- ensuring strong leadership and commitment to financial management within
the agencies and OMB;
-- improving the accuracy of data and the soundness of internal controls in
agencies;
-- expanding financial auditing in agencies;
-- strengthening the qualifications of financial management personnel;
-- reengineering the government's financial management processes to integrate
accounting, budgeting, and program activities and information; and
-- developing useful and relevant financial reports that emphasize
accountability and operating performance.
Likewise, a commitment by both the executive and legislative branches to
improving information technology is crucial. Agencies need to adopt a
management philosophy that emphasizes the continuous streamlining of business
processes, which should precede the development and acquisition of automated
systems. Adoption of this philosophy implies the appointment of top-level
executives who are familiar with the uses of information technology in
simplifying business practices and who can devote full attention to this
issue. Even though agency budgets are tight, the information management
function must be supported with adequate staff resources because the potential
long-term paybacks for the agency make this a key area for added investments.
In addition, given the existing constraints in the budget and acquisition
processes, experimentation may be appropriate to develop a broad-based
agreement on new management models needed to build an effective information
technology infrastructure in federal agencies.
_______________________________________________________________________________
Creating a Results-Oriented Environment
Several pilot programs have been established in various federal agencies to
create a more results-oriented environment. For example, OMB and the Railroad
Retirement Board agreed on a prototype of a performance agreement with
specific measures of results as a tool for increasing the Board's
accountability. And the Defense Business Operations Fund is attempting to
focus the Defense Department's delivery of support services more effectively
on customers and plans to allocate funds on the basis of performance.
Other smaller-scale initiatives are under way to reduce controls in areas such
as human resource management, procurement, and budget to create a
results-oriented environment in several agencies. As noted earlier, proposed
legislation would foster a series of pilot programs through which agencies
would obtain waivers from central management agency regulations but not from
statutory provisions. If successful after 3 years, agencies would be granted
permanent waivers. We believe that this flexible, incremental approach has
merit.
Managers must be given the incentives and tools to create a results-oriented
work environment. Without incentives and tools to manage for results, managers
have little control over their operations. Consequently, they focus more on
complying with the accountability controls placed on them (which often have
multiple objectives) than on achieving their agencies' overall missions. These
controls affect their hiring, promoting, and rewarding; create a
rule-intensive procurement and contracting maze; and rigidly regulate funds.
As in the financial and information technology areas, creating a consensus for
change will be important. There are no easy answers; therefore, it will be
important for all parties involved to have the willingness and flexibility to
experiment with different approaches.
===============================================================================
FOCUSING ON THE LONG TERM
A fundamental cause for inaction is anchored in the short-term mentality
created by the political appointment process, the budget process, and
underinvestment in the public service.
_______________________________________________________________________________
Developing Continuity in Leadership
Leadership issues need to move to the forefront, and developing continuity is
important. The following actions can create the right environment:
-- Ensure that people with the appropriate skills and experience are selected
for top management positions.
Governmentwide, these positions would include the deputy director for
management and the controller in OMB, the deputy secretaries responsible for
overall management of cabinet departments, and the chief financial officers
and senior information management officials in government agencies. The
Senate, through its confirmation process, has an important role in ensuring
the qualifications of nominees for such positions.
-- Ensure that these people will make a sustained commitment to addressing
long-term management problems in addition to focusing on policy issues.
This includes encouraging them to stay in office for longer periods and
planning for good succession, when needed.
-- Continue improvements that are already under way, such as staffing OMB's
management function, implementing the CFO Act in agencies, and developing
strategic plans in departments and agencies. To support these efforts,
the Congress can ensure that funds are available to carry out these
actions.
In general, the accountability of top political appointees has been a concern.
In a number of other countries, fewer political appointees are found in the
upper levels of government, and individual and organizational performance
agreements are being used to clarify accountability and responsibilities.
While such agreements may not be directly transferable to the U.S. government,
the President and the Director of OMB should consider using written
organizational performance agreements between department and agency heads to
better define and clarify program missions, intended results, and the facts
that will be used to measure continuous improvements.
Currently, the performance management systems in agencies tend, for the most
part, to assess the activities of career individuals and are not results
oriented. For example, in cases where performance agreements are used as a
tool to manage the performance of individuals, the results expected of career
senior executives are tied to measures of program performance in only about
one-third of the largest agencies. In addition, political appointees are not
required to have performance agreements; currently, their relationship with
the President and other senior political appointees is much less formal.
_______________________________________________________________________________
Revising the Budget Process
The way the federal government manages and the way it budgets are
interrelated. The budget process should be reassessed as part of any overall
effort to create a longer-term focus on management. The following changes
should be part of that assessment:
-- Require the use of accrual concepts, where appropriate, to heighten the
recognition of the effects of long-term costs. As mentioned earlier, the
existing cash-based budget structure fosters a short-term focus.
Expanding the use of accrual concepts, where appropriate, would
ensure that the full costs of current decisions are recognized.
For example, the Federal Credit Reform Act of 1990 recast the
budgetary treatment of loan and loan guarantee programs to
fully recognize their subsidy costs.
-- Create a longer-term framework for budget policy decisions by highlighting
the differences between spending that contributes to long-term economic
growth and spending for current consumption. The current budget process
does not formally recognize the different long-term economic effects
of various programs. Decisionmakers need to be able to see the
distinctions between investment programs and current
consumption programs when making choices. In addition, more
reliable information on the rates of return among
alternative types of investment programs is needed.
-- The budget needs to focus decisionmakers on the results of their choices
among competing objectives. Considerable performance information is
currently provided in agency budget justifications, but little is known
about how reported performance relates to objectives and spending.
Carefully chosen pilot projects may be appropriate to develop
these links. For selected programs, budget information could be
reported on a program basis along with the program's
strategic goals and related performance information.
_______________________________________________________________________________
Strengthening the Public Service
Human resource issues need to be dealt with seriously if the public service is
to provide the leadership necessary to address the management problems facing
the government. Both financial investments and steps such as the following are
essential to improve the public service:
-- Rebuild a positive public image for the public service to restore the
public's confidence in government and to make it an attractive career
choice.
-- Modernize the government's employment policies, in general, to recognize
and accommodate the dramatic demographic changes--primarily the growth in
the number of women employees--that have occurred in the nation's
workforce.
-- Enhance the government's ability to effectively manage its workforce by
giving agencies more flexibility to manage the performance of their
employees.
-- Ensure full implementation of the Federal Employees Pay Comparability (Pay
Reform) Act of 1990 to help make the government a more attractive employer
and, thereby, enhance agencies' abilities to recruit and retain the
quality employees needed to carry out the agencies' responsibilities.
===============================================================================
REALIGNING THE MACHINERY OF GOVERNMENT
The roles of the central management agencies should be reassessed and the
organizational structures of individual agencies should be reevaluated.
_______________________________________________________________________________
Reorienting the Central Management Agencies
In recent years, the central management agencies--OMB, GSA, and OPM--have
gradually shifted from controlling agencies to helping them take the lead in a
series of areas. This trend needs to be accelerated.
Decreasing central management controls and giving line managers the authority
to act within an overall framework of results-oriented objectives have been
significant management trends in private corporations and in the governments
of some states and other countries during the past decade. Some of these
governments consciously set out to devolve certain functions traditionally
held by their central management agencies to line agencies. They have, for
example, broadened the authority of individual agencies to classify personnel
positions, recruit staff, acquire office space, and determine appropriation
draw-down rates. Broadening agencies' authority to act within a defined
framework seemed, in the other governments we studied, to give managers the
incentive to focus on results instead of complying with top-down constraints.
In the last decade, the federal government's central management agencies have
begun to serve a support role and to delegate authority to act in certain
areas. As noted earlier, credit for this is partly attributable to OMB's
creation of a deputy director for management position. OMB's management staff
has increased its emphasis on assisting--rather than directing--agencies in
resolving their management problems.
The increased willingness to delegate to agencies the authority to act is
partly attributable to OMB's support for the TQM movement. The increased
willingness also may be attributable to OMB's efforts to promote the
development and use of performance measures. Because these two efforts are
creating an environment in which central management agencies can focus on
results and reduce controls on the use of inputs, it will be critical not to
lose the widespread momentum behind TQM and performance measurement as new
staff take over the top leadership positions in these agencies in early 1993.
In addition, the Pay Reform Act of 1990 gave agencies a wider range of tools
to pay and reward staff. Likewise, GSA has delegated limited authority to
agencies to manage their properties and leases. GSA and OPM should be
encouraged to continue these efforts to broaden agencies' authority to act and
identify opportunities to expand these efforts. Our transition series report
_General Services Issues_ (GAO/OCG-93-28TR, Dec. 1992) provides a context for
the directions that GSA might take to focus more on policy and less on
delivering direct services.
Agencies' organizational structures influence the environment in which
agencies' managers must operate. These structures should be reexamined to
determine whether they impede a results orientation. We have traced major
management problems in specific agencies--such as the Customs Service and the
Departments of Agriculture and Veterans Affairs--to outdated organizational
structures.
For example, the Department of Agriculture has an extensive and costly field
structure of 11,000 field offices, many of which date from the 1930s--before
highways, computers, and universal telephone coverage facilitated
communication. In the past 60 years, Agriculture's responsibilities have
changed radically, and the number of farmers has decreased significantly. But
the Department's field structure has not changed, in part because of political
pressures. As a result, it has many underused field offices that could be
consolidated to create annual savings of more than $100 million.
But the need to address organizational issues does not rest solely with
individual agencies. For example, the jurisdictions of some congressional
committees overlap and create conflicting priorities within some agencies. A
joint congressional study committee has recently been chartered to examine the
scope of committee jurisdictions. Likewise, in the executive branch,
duplicative organizations in areas such as competitiveness, the drug war, and
law enforcement have frequently been targeted for restructuring to be more
results oriented. Efforts that go beyond a single agency will take substantial
dedication to resolve. Several executive branch reorganization bills, or study
commissions, were proposed in the 102nd Congress, but no action was taken.
Under the new administration, efforts to restructure the executive branch will
need to be rejuvenated in order to better focus the resources of government on
accomplishing specific missions.
